by Dan Rafter
Monica Makin, vice president of acquisitions and asset management with Chicago’s Urban Innovations, is a fan of Chicago’s multi-family market. And why not? The number of renters flocking to hot Chicago neighborhoods – and even many of its inner-ring suburbs – is still on the rise. And, as Makin says, there’s no sign yet of a slowdown in the city’s multi-family demand.
Midwest Real Estate News: This is fairly obvious today, but is the demand for Chicago-area apartments still strong?
Monica Makin: Oh, yes. The number of renters here continues to grow. We are seeing more kids coming out of college and wanting to live in the city. So there are several neighborhoods throughout the city that are really strong when it comes to multi-family.
MWREN: Some Chicago neighborhoods seem to be especially strong when it comes to multi-family.
Makin: Yes, you look at River North, for example. That market is still really strong. A lot of people are coming into that market and renting there. But we’re also looking at some other markets for expansion. We are buying another residential multi-family building in Oak Park. Oak Park might be a suburb, but it feels like a Chicago neighborhood. We look at expansion on a neighborhood-by-neighborhood basis.
MWREN: When you’re looking to purchase multi-family buildings, what do you look for in a neighborhood?
Makin: It’s still about supply and demand. Do people want to live in a certain neighborhood? We look at whatever a neighborhood offers, whether it’s a prime location, jobs or family-friendly amenities. It’s all about where people want to live. That is where the multi-family money is flowing. We are seeing a lot of activity in Rogers Park and Uptown. Developers are converting buildings that were previously affordable housing into market-rate housing. There is a demand there. There are market-rate renters ready to move into those buildings.
MWREN: Any other interesting multi-family trends right now?
Makin: The neighborhoods closer to Chicago have become too expensive for a lot of renters, for a lot of young professionals. So they have to go farther out to afford rents. Some of the developers and owners are catering to that demographic.
MWREN: We all know that multi-family has been the hottest commercial sector for a long time. What is behind this?
Makin: People losing their homes is still a big factor. The age of the population matters, too. Younger people want to rent. But even older people do, too. People who have raised families and previously had homes are getting older and they would rather rent. Caring for a house is too much. They are looking for the flexibility and convenience of renting. At the same time, a lot of investors are looking for places to put their money. They are getting back into the market. Multi-family is a good bet in terms of the asset classes.
MWREN: What amenities are renters looking for today?
Makin: Everybody likes the new stainless steel appliances and the granite counter tops. But I think renters are mostly looking for square footage. Newer apartments are getting smaller and smaller. The multi-family purchases that we have made have been older buildings with larger units. The older stock tends to have larger apartments. Of course, the amenities that you need is largely dependent on the market you are catering to. Younger tenants won’t be in your units for too many years. But if you’re renting three- or four-bedroom apartments for families, those tenants will be in your space for a longer number of years. These longer-term tenants want dishwashers and garbage disposals. They want to be close to pools or playgrounds for their kids. The younger renters don’t care about much of that.
MWREN: What neighborhoods in the Chicago area remain hot when it comes to multi-family demand?
Makin: Wrigleyville and Lincoln Park remain very popular. They have the amenities that younger people are looking for. Of course, they are much more expensive. Ravenswood is more affordable and is more family oriented. There are some areas right outside the city that are strong. Bellwood is strong. We like the city of Bellwood and its demographics. Obviously, Oak Park is very popular. Mt. Prospect is a strong area.